Franchise Forecast 2025: What India’s Shoppers and Entrepreneurs Need to Know?

Did you ever imagine that just in 10 minutes, you could have a mobile phone or laptop delivered to your doorstep? Or that you could drive an electric car in a Tier 4 town, with access to charging stations? The world is becoming smaller, and every global brand you once dreamed of traveling to purchase is now easily available in Tier 3 and 4 towns.

This accessibility has been made possible thanks to the franchise business model, which enables brands to scale efficiently while empowering local entrepreneurs. By partnering with franchisees, global and national brands have created a network of opportunities, fostering entrepreneurship and transforming small-town economies.

Franchising is not just about bringing products closer to consumers; it’s about creating ecosystems of growth. It allows individuals with ambition and vision to start their own businesses with the support of established brands. This model has played a significant role in generating employment, from local store managers and delivery staff to skilled technicians and back-end support teams.

India’s retail and franchise industry is growing rapidly, driven by shifts in shopping habits, advancements in technology, and the expansion of new markets. The rise of franchising has directly contributed to the development of Tier 2, 3, and even 4 cities, making them hubs of economic activity and bridging the gap between rural and urban economies.

For example, in 2024 alone, nearly 50% of franchise expansions took place in smaller cities, leading to thousands of new jobs and entrepreneurial ventures. This trend is expected to continue, with the franchise market projected to surpass ₹15,000 crore by 2025.

The franchise model is not just transforming markets; it’s empowering people, creating a new generation of entrepreneurs, and driving India’s economic growth. Lets read below the trends that will lead the pack in the franchise industry.

Shopping Online and In-Store Together (Omnichannel Retail)

People now want the best of both worlds—the convenience of online shopping and the experience of visiting stores. Many businesses are combining their websites, apps, and physical stores to serve customers better. For example, you can order online and pick up in-store. Omnichannel customers spend 30% more than those who shop only online or in stores.

 

 Fast Deliveries in Local Areas (Hyperlocal Delivery)

Quick delivery services are booming as customers prefer to get groceries and food delivered to their homes quickly. Companies are opening smaller stores and warehouses closer to customers to make this happen. Brands like Blinkit plans to double its stores from 1,000 to 2,000 by December 2025. The Quick commerce industry grew 120% in 2024.

 

Using Technology to Improve Shopping

Brands are using tools like Artificial Intelligence (AI), Augmented Reality (AR), and smart devices to improve shopping experiences. These tools help customers try products virtually or get better recommendations.

Trends:

AR lets you try on clothes or makeup virtually.

Smart shelves in stores track inventory.

AI chatbots answer customer queries.

 

 Customers Want Sustainable Brands

People care more about the environment. They are choosing brands that use eco-friendly packaging and processes. Many businesses are now focusing on sustainable practices to meet this demand. 75% of Indian consumers prefer sustainable products.

 

Expansion in Smaller Cities

Big brands are moving beyond metro cities to smaller towns where demand is growing. Cities like Jaipur, Indore, and Lucknow are becoming hot spots for franchise growth.

Focus Areas:

• Quick-service restaurants (like Domino’s).
• Health and wellness centers.
• Education and coaching institutes.

 

Fun and Unique Store Experiences

Customers love stores that offer more than just products. Brands are creating fun zones or organizing events to attract shoppers. Jewellery brand like Tanishq has introduced in-store experiences like customization and design workshops.

 

New Business Ideas for Franchising

Franchising is no longer just for restaurants or clothing stores. New areas like Drone Franchising, Caregiving Services, coworking spaces, pet care, and electric vehicle charging stations are growing through franchises.

 

 Online-Only Brands Opening Stores

Direct-to-Consumer (D2C) brands that started online are now opening physical stores to connect with more customers and expand faster. Several beauty and personal care brands are using this strategy.

Government Support

The Indian government is helping small businesses and franchises grow by offering subsidies and support, especially for electric vehicles (EVs) and startups.

 

Subscriptions Are Growing

Subscription-based shopping is becoming popular. From monthly meal kits to fashion and beauty boxes, franchises are using this model to keep customers coming back. Subscription services in retail are growing by 15% annually. India’s retail and franchise industry in 2025 is all about meeting customer needs, using technology, and exploring new markets. Businesses that focus on these trends will grow faster and stronger.

 

Franchising Growth in India (2018–2024)

1. Market Growth and Size

• 2018: The franchising market was valued at approximately INR 4,500 crore.
• 2024: By the end of 2024, the market size reached an estimated INR 12,500 crore, marking a CAGR of 25% over the past six years.
• India now contributes ~3% of the global franchise market, up from 1.8% in 2018.

 

2. Key Drivers of Growth

• Urbanization: By 2024, 38% of India's population lives in urban areas, significantly increasing demand for organized services.
• Tier 2 & 3 Cities: Nearly 50% of franchise expansions from 2021–2024 happened in smaller cities, due to rising disposable incomes and untapped markets.
• Government Initiatives: Schemes like Startup India and Skill India provided a boost by offering subsidies and easier licensing for entrepreneurs.

 

Sector-Wise Growth (2018–2024)

Sector	Contribution (2018)	Contribution (2024)	Growth Highlights
Food & Beverage	~30%	~35%	Major brands like Domino's expanded aggressively.
Education	~20%	~22%	Preschools and online coaching Centers saw robust growth.
Retail	~25%	~20%	Growth led by fashion, grocery, and lifestyle brands.
Health & Wellness	~15%	~18%	Gyms, salons, and clinics like Cult.fit scaled up.
Services	~10%	~15%	Home services and EV charging franchises gained traction.

 

Geographical Spread

• Tier 1 Cities: Delhi, Mumbai, and Bengaluru continue to dominate but are now saturated.
• Tier 2 & 3 Cities: Contributed 40% of the total franchise openings in 2024, with cities like Lucknow, Indore, and Coimbatore emerging as new hubs.

 

Emerging Trends

1. Technology Integration: Use of AI and cloud-based solutions to streamline operations.
2. Low-Cost Franchises: Franchises with initial investments under INR 10 lakh grew 40% YoY, appealing to first-time entrepreneurs.
3. Sustainability Focus: Green and eco-friendly franchises, such as those in renewable energy and EV charging, saw significant growth.
4. Home-Based Businesses: Post-pandemic, home-based franchises grew 30% annually, particularly in ed-tech and home services.

 

 Challenges

• Intense Competition: Saturation in certain sectors like QSR (Quick Service Restaurants) in Tier 1 cities.
• Operational Costs: Inflation and real estate costs in urban areas added pressure on margins.
• Skilled Labor: Retaining skilled staff remains a challenge across sectors.

 Growth Outlook

• The franchise market is expected to surpass INR 15,000 crore by 2025, with a focus on Tier 2 and Tier 3 cities.
• Key growth areas include:
• F&B: Estimated to grow at 25% YoY.
• Health & Wellness: Predicted growth of 20% YoY.
• Tech-Driven Models: Expected to dominate 30% of the market by 2025.

Source:  Franchise India Reports,  KPMG and EY Reports, IBEF (India Brand Equity Foundation & Statista